The public finances are getting no better, and we are faced with the prospect of ever more severe cuts. Time to shed some light on their impact
The government has failed to meet its stated targets for reducing the deficit and the national debt – indeed the trend has been in the other direction. It has signalled that still more public expenditure cuts will be required and the Opposition (to nobody’s surprise) has indicated that it will work within the coalition’s expenditure envelope immediately after the general election, should it win. A further Spending Review will follow the 2015 general election and there seems almost no prospect that any new government will reverse the cuts programme. Indeed, sadly and some of us would argue unnecessarily, there is every prospect of even more severe cuts.
Political commitments to protect some services such as the NHS and schools do not match the experience of those working in and using these services. Of course, compared with some sections of the public sector (including local government), the NHS and schools have indeed been ‘protected’. The reality, however, is that with most of the 2010 cuts still to be implemented, the public sector and public services are facing a very bleak financial future.
The National Audit Office has recently reported that whilst most local authorities have managed to balance their budgets and avoid disaster, many will not be able to do so in the next few years. In fact, the NAO has said that central government and DCLG in particular seem not to understand the impact of its cuts on local authorities and their services. Well, people working in and/or using these services could certainly tell them about the impact.
If there are to be more cuts, or even if public bodies were (in the very unlikely event) going to be able to maintain their current total levels of expenditure with transfers of resources between services, there is a desperate need to measure the impact of budget decisions. This is necessary to ensure democratic accountability. It is also necessary for the planning of future budgets. Lessons can be learnt and shared between agencies too.
My own view is that every public body should undertake an assessment of the potential impact of proposed cuts before they are implemented. Such assessments should be as rigorous as those which are undertaken in advance of major investment decisions. They should estimate long term costs to the agency undertaking the cut as well as to other agencies that might be the recipients of deliberate cost shunting or unintended consequences. They should also estimate the impact on employment (both direct and indirect) – and on the local economy. The potential impact on service quality, responsiveness, access and sustainability also needs to be understood. And there is a need to understand and forecast the wider social, human, environmental and economic costs of proposed cuts.
Politically accountable bodies should have clear objectives and stated political values – and their proposed cuts should be assessed against these, with clear statements of why they are being proposed in the context of these objectives and values. A cuts agenda should be values-driven, in the same way as a growth agenda.
Such assessments should be subject to public and stakeholder consultation, scrutiny and challenge. They should also, wherever possible, be undertaken on a multi-agency basis. For example, within a given locality, local government (as ‘place shaper’ and leader) ought, subject to resources, to be the natural co-ordinator of a place-based approach. Such an approach could encourage a greater sharing and pooling of resources between agencies.
Once cuts have been made, their impact and consequent outcomes should be calculated on the same basis as they were assessed before implementation. The gap between the two sets of data should be revealing and contribute to better future political and managerial decisions. Those taking the decisions and those implementing them can then be held to account for their actions.
However, all this requires a clear understanding of delivery and financing chains. For example, central government cuts impact on local government grants, which in turn impacts on local services, and often, local voluntary groups and others. This needs to be understood. And these chains of responsibility should be transparent, in order to illuminate where responsibility and accountability lie. Such arrangements should not be used for obscuring responsibilities and accountabilities. Rather, it is essential that when a local or devolved body makes its decisions, it discloses the options it has considered and why it has determined on the action that it has. Yes, there will be choices, however, hard and unpleasant these may be, but the public is entitled to understand which are being made and which are not – and why? This is part of the democratic compact between citizen and government.
Over the next few years, and perhaps longer, public services are going to be financially very ‘constrained’ and ‘strained’. It would seem that there are going to be more cuts to come, with still more following these. That is the pragmatic reality that we face. Personally, I wish this were not going to be the case, and I would prefer to see the deficit closed through more growth and progressive taxation rather than more and more cuts. And I do believe that if there were greater public transparency, engagement and accountability in public finance and budget decisions, it is just possible that there could be a stronger political campaign for an alternative macro-policy.
Still, regardless of the national macro-economic and political strategy, there is an urgent need for greater transparency and exemplar governance around budget decisions and the choice of cuts across the public sector and political bodies.
Personally I would wish to see these programmes be shaped by the pursuit of fairness, social justice, greater equality, less poverty and social exclusion, stronger communities, and growth. Others will have their own preferences and objectives but unless we assess, measure and publish what we are thinking about, planning and implementing – there can be no expectation that any or anyone’s objectives will be realised. There could, however, be much social, environmental and economic damage before the reality of the impact of what is being done is understood. There has to be a better, more assured and democratic route. Let’s adopt it.